Pro-union demonstrators outside the United States Supreme Court in Washington, Jan. 11, 2016. Last week’s arguments in Friedrichs v. California Teachers Association illuminated a gap in the Supreme Court’s treatment of capital and labor: The court has long allowed workers to refuse to finance unions’ political activities, but shareholders have no comparable right to refuse to pay for corporate political speech. ZACH GIBSONNew York Times

Pro-union demonstrators outside the United States Supreme Court in Washington, Jan. 11, 2016. Last week’s arguments in Friedrichs v. California Teachers Association illuminated a gap in the Supreme Court’s treatment of capital and labor: The court has long allowed workers to refuse to finance unions’ political activities, but shareholders have no comparable right to refuse to pay for corporate political speech. ZACH GIBSONNew York Times

Free-speech gap between unions and corporations

The Citizens United decision, which amplified the role of money in U.S. politics, also promised something like a level playing field. Both corporations and unions, it said, could spend what they liked to support their favored candidates.

But last week’s arguments in a major challenge to public unions illuminated a gap in the Supreme Court’s treatment of capital and labor. The court has long allowed workers to refuse to finance unions’ political activities. But shareholders have no comparable right to refuse to pay for corporate political speech.

At the arguments in the case, Friedrichs v. California Teachers Association, No. 14-915, the justices seemed poised to widen that gap by allowing government workers to refuse to support unions’ collective bargaining activities, too.

The question in the Friedrichs case is whether government workers who choose not to join unions may be required to pay fees to support collective bargaining.

The case should prompt a new look at whether the differing treatment of unions and corporations is justified, said Benjamin I. Sachs, a law professor at Harvard.

“If we’re going to make this opt-out right for workers more and more muscular, which is what is going to happen with Friedrichs,” he said, “the question of symmetrical treatment of shareholders just becomes that much more important.”

The differing treatment is warranted, the Supreme Court has said, because it is hard to change jobs and easy to sell shares, and because shareholders can influence what corporations say.

“The disincentives to dissociate are not comparable,” Justice Anthony M. Kennedy wrote in 1990 in his dissent in Austin v. Michigan Chamber of Commerce. “One need not become a member” of a corporation, he said, “in order to earn a living.”

“Allowing government to use the excuse of protecting shareholder rights to stifle the speech of private, voluntary organizations undermines the First Amendment,” Kennedy wrote.

The Austin decision was overruled by Citizens United in 2010 – in a majority opinion by Kennedy, one that vindicated his 1990 dissent.

In Citizens United itself, Kennedy said the case for differing treatment had gotten stronger.

“Shareholder objections raised through the procedures of corporate democracy,” he wrote for the five-justice majority, “can be more effective today because modern technology makes disclosures rapid and informative.”

A supporting brief filed in the Friedrichs case by 19 of the nation’s leading corporate law professors called that view naïve.

“Most individual shareholders cannot obtain full information about corporate speech or political activities, even after the fact,” the brief said. “Nor can they prevent their savings from being used to speak in ways with which they disagree.”

The question in the Friedrichs case is whether government workers who choose not to join unions may be required to pay fees to support collective bargaining. These workers are already entitled to a refund for fees spent on classic political activity. But they contend that all of a public union’s activities are political and that being made to support them is compelled speech that violates the First Amendment.

Accepting that argument, the professors’ brief warned, would further tilt the political playing field in favor of corporate power.

“If this court chooses to grant additional First Amendment rights to union nonmembers,” the brief said, “it will only further increase the extent to which they enjoy greater rights than do corporate shareholders.”

There are important differences, of course, between making an investment and holding a job.

For starters, it is much easier to sell stock than to change employers. But lots of people, and certainly those who follow conventional advice about how to invest prudently, keep their retirement savings in diversified holdings like mutual funds.

“Many individuals are effectively compelled to maintain investments in companies whose political expenditures they do not know and cannot control,” the law professors’ brief said.

There is another important distinction between the teachers who brought the new case and investors in companies. The First Amendment is a limit on government power, and it does not directly affect private agreements, whether between companies and shareholders or between private employers and their workers.

But at last week’s argument, Kennedy mused about whether that should be so, at least in the context of labor unions.

“I think that’s correct as a basic distinction,” he said of the difference between the government and private employers. But he told the teachers’ lawyer that laws requiring workers at private firms to pay fees to their unions could also raise a First Amendment problem.

“That is state participation in the very kind of coerced membership and coerced speech that you’re objecting to,” Kennedy said of such laws.

In a 2012 article in The Columbia Law Review, Sachs suggested a congressional fix to restore symmetry to what he called “political opt-out rights.”

”The firm would be required, as unions are, to determine what percentage of its overall annual expenditures are political ones,” he wrote. “Each objecting shareholder would then be entitled to an annual dividend equal to their pro rata share of these political expenditures.”

Sachs said there was reason to think Congress might enact that kind of law. “Such a move would garner the support of the labor movement, some significant portion of the institutional investor and shareholder advocacy community, as well as the campaign finance reform community,” he wrote.

But that was four years ago, and he may have been optimistic.

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